Update on the News

By S and ra SugawaraJanuary 27, 1986

The insurance crisis that hit Maryland's day care industry this past summer appears to be under control, according to state officials, although the General Assembly is still expected to consider measures designed to improve the situation.

John Quinn, Maryland's executive assistant commissioner of insurance, said a marketing assistance program started by the state insurance division appears to be working.

Under the program, the executives of the leading insurance companies that operate in Maryland have pledged to provide, on a rotational basis, insurance for day care facilities that have had policies canceled and cannot get other companies to approve new policies.

In addition, some insurance companies are voluntarily coming back into the market, according to Quinn. "Insurance companies appear to be relaxing their standards somewhat."

In July, Maryland Insurance Commissioner Edward J. Muhl said that hundreds of day care facilities in the state had received notices of cancellation and could not get new policies, or that their premiums were drastically increased, because of publicity about sexual abuse and child abuse cases.

Muhl said insurance firms were dropping high-risk industries, such as day care, where there is the potential for large liability awards. Virginia and District officials said they had received some complaints, but nothing on the magnitude of those in Maryland.

Muhl negotiated with insurance firms to prevent immediate midterm cancellations. Such cancellations might have prevented many day care facilities in Maryland from opening in September, causing a huge shortage of day care services this fall.

But insurance coverage for many of the day care facilities was scheduled to end at the beginning of January.

However, two weeks into January, Quinn said the state insurance division, which last spring was flooded with cries for help, has not heard from any day care operator unable to get insurance. "So a valid assumption is that it the market assistance plan is working," he said.

The insurance crisis was studied last year by two task forces appointed by Gov. Harry Hughes, and he is expected to recommend that the General Assembly enact bills to cut the number and size of awards in lawsuits and protect municipalities from large damage awards.